For both buyers and sellers, the upcoming holiday season is having an impact on real estate plans as sellers trim home prices at record levels to get them sold — or, in some cases, take their homes off the market altogether.
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According to October data from Zillow, the typical U.S. listing experienced $25,000 in price cuts last month, “matching the largest discounts Zillow has ever recorded.” The steep price cuts were possible thanks to the past few years of record-high home values, the portal said in a report.
Kara Ng | Credit: Zillow
“Most homeowners have seen their home values soar over the past several years, which gives them the flexibility for a price cut or two while still walking away with a profit,” said Zillow Senior Economist Kara Ng. “These discounts are bringing more listings in line with buyers’ budgets, and helping fuel the most active fall housing market in three years. Patient buyers are reaping the rewards as the market continues to rebalance.”
The steepest median discounts are coming from the country’s priciest markets, including San Jose, California ($70,900), Los Angeles ($61,000), San Francisco ($59,001), New York ($50,000) and San Diego ($50,000).
At the other end of the scale, the metro markets that haven’t had to give as much include Louisville, Kentucky ($15,000), St. Louis ($15,100), Indianapolis ($16,000) and Detroit ($17,100). In all of these markets, homes are selling more quickly than the national average. Homes for sale also tend to be newer construction, meaning sellers don’t have to discount as steeply to find their buyers.
For those sellers who didn’t find their footing in the summer and early fall market, delistings have reached record levels, according to September data from Redfin. This is part of a larger trend of delistings, which have been on the rise for the past year and a half.
Redfin looked at the homeowners who were most likely to pull their homes off the market and found that nearly half (47 percent) involved sellers who had purchased the home within the past five years. Thirteen percent involved sellers who had purchased their home less than two years ago.
“Many homeowners who bought during the pandemic demand frenzy still expect sky-high prices. They remember a seller’s market, so they’re hesitant to yield to buyers who want to negotiate the price down and/or ask for concessions,” Redfin Senior Economist Asad Khan said. “Recent buyers are also more likely to be testing the market; maybe they would sell and move up to a bigger home in a more desirable neighborhood if they get the price they want, but otherwise they’d stay put. Longtime owners, though, are more motivated to sell — they’re often downsizing or relocating for retirement.”
Asad Khan | Redfin Senior Economist
Among the reasons Redfin’s researchers gave for the spike in delistings were:
- More stale listings, with 70 percent of U.S. home listings on the market for at least 60 days without going under contract. In fact, Redfin found that the typical September delisting had been on the market for 100 days.
- Slow homebuying demand, with buyers stymied by high mortgage rates, lack of affordability and “widespread economic uncertainty.”
- Risk of selling at a loss was a motivator for some 15 percent of September delistings.
- Preference for pulling the home off the market and renting it out over selling for less than they believe the property deserves.
- More listings in total, with active U.S. listings up 8 percent year over year to their highest September levels since 2019.
Florida and Texas have been hardest hit by stale listings, with Miami and Fort Lauderdale both at 84.6 percent, Austin at 82.8 percent, West Palm Beach at 82 percent and San Antonio at 81.2 percent.
